Iran Peace Deal Not Enough to Halt Tightening in the Philippines and Indonesia

The BSP and Bank Indonesia have both implemented 25bp rate hikes to address inflation and currency depreciation. Despite potential relief from a regional peace deal, both central banks maintain cautious, hawkish stances.

Key Takeaways

• 1.The Bangko Sentral ng Pilipinas (BSP) maintains a steady tightening bias due to second-round inflation risks despite easing oil prices.
• 2.Bank Indonesia raised rates by 25bp to 5.75% to stabilize the rupiah, but policy uncertainty limits effectiveness.

Table of Contents

• BSP's measured tightening bias amid persistent oil uncertainty
• Second-round effects in focus; food and core inflation key
• Maintain view of more hikes in the Philippines; PHP could continue to recover
• Bank Indonesia hikes to defend IDR, but structural concerns persist

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